Barrick Mining Corporation

Good day, and thank you for standing by. Welcome to the Barnes Group Incorporated Third Quarter 2021 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Bill Pitts, Director, Investor Relations. Please go ahead.

Thank you, Operator. Good morning, and thank you for joining us for our third quarter 2021 earnings call. With me are Barnes Group's President and Chief Executive Officer, Patrick Dempsey, and Senior Vice President and Chief Financial Officer, Julie Streich. If you have not received a copy of our earnings press release, you can find it on the investor relations section of our corporate website at bginc.com. During our call, we will be referring to the earnings release supplement slides, which are also posted on our website. Our discussion today includes certain non-GAAP financial measures, which provide additional information we believe is helpful to investors. These measures have been reconciled to the related gap measures in accordance with SEC regulations. You will find a reconciliation table on our website as part of the press release and in the form 8K submitted to the Securities and Exchange Commission. Be advised that certain statements we make on today's call, both during the opening remarks and during the question and answer session, may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Please consider the risks and uncertainties that are mentioned in today's call and are described in our periodic filings with the SEC. These filings are available through the investor relations section of our corporate website at BGINC.com. Let me now turn the call over to Patrick for his opening remarks. then Julie will provide a review of our financial results and details of our updated outlook for 2021. After that, we'll open up the call for questions. Patrick?

Thank you, Bill, and good morning, everyone. Barnes Group delivered a very good third quarter of financial performance with 20% organic sales growth, a 180 basis points increase in adjusted operating margin, and an 80 plus percent increase in EPS year over year. Sequentially, each of those metrics improved as well. Clearly, last year was highly impacted by the global pandemic. Nonetheless, the demand environment overall improved across the portfolio as each of our SBUs generated double digit organic sales growth. Similarly, orders were seasonally good, as we generated a book to bill of 0.9 times for both industrial and aerospace. Industrial book to bill in the third quarter is typically impacted by the summer holiday season, particularly in Europe. That said, the ongoing impact of auto semiconductors lingered, and I'll address that in more detail shortly. In aerospace, orders were healthy for a fourth straight quarter. Moving to our segment discussion, beginning with industrial. Organic sales growth was 17%, while organic orders growth was 3%. As we exit the third quarter, manufacturing PMIs in the U.S. and Eurozone remain well in expansionary territory, though not as robust as they were entering the quarter. China continues to hover around the neutral 50 mark, The continuing semiconductor issue affecting automotive bills has worsened, prompting IHS to make a significant downward adjustment to their global automotive production forecast in September. Relative to their prior view, 2021 production was reduced by 5 million units, or 6%, and 2022 was reduced by 8.5 million units, or 9%. The decrease corresponds to customers extending shutdowns and pushing out demand for our products. For 2022, IHS expects global auto production to grow 11% over this year, so still a rebound. Supply chain disruptions, including extended raw material lead times, inflation and freight costs, have also persisted throughout the quarter. and we expect them to continue through the remainder of the year and into the first half of 2022. In spite of the headwinds, the industrial team has done a great job to improve margins both year over year and sequentially. Operating margin was 13% up 60 basis points from a year ago and 130 basis points sequentially. Inflationary pressures are being mitigated to the extent possible through pricing actions and raw material pass-through arrangements. Our Barnes Enterprise system is being employed to create various cost savings. While our July outlook contemplated $2 million of second-half inflation pressure, we saw approximately $2.5 million in the third quarter, and we now forecast a similar amount in the fourth quarter. Within molding solutions, organic orders were up low single digits with medical rebounding up year over year and sequentially. Automotive orders were solid up mid-teens, driven by a strong quarter in Asia. Packaging and personal care orders were soft compared to a year ago. With respect to organic sales, we generated a 15% increase over the prior year quarter. Personal care and medical saw good sales growth, while automotive was particularly strong. However, with anticipated supply chain factors in mind, our organic sales growth outlook has been trimmed to the low teens for the full year, a bit softer than our prior view. At force of motion control, organic orders were up 27%, with organic sales up 24%. On a sequential basis, sales and orders were approximately flat. Our largest end market with this business, sheet metal forming, saw robust orders and sales growth year over year. And the same is true for our industrial end markets within FMC. Supply chain disruptions, including freight delays, are expected to influence near-term customer orders. Nonetheless, our full year 2021 organic sales growth is up slightly from a prior view, with a revised expectation of up high teens. Engineered components once again generated solid organic sales growth on a year-over-year basis, up 15%, primarily driven by industrial end markets. Our automotive production end market sales were up modestly. Though the third quarter saw semiconductor and supply chain issues intensify, impacting both orders and sequential sales growth. The automotive semiconductor issue impacts this business the most, and we saw a third quarter push out of approximately $6 million in revenue, which was double what we anticipated. We now forecast a fourth quarter impact of a similar $6 million. General industrial markets remain very healthy and are helping to mitigate some of the semiconductor impact. For engineered components, our full-year organic sales growth is now estimated to be up in the mid-teens, a bit lower than our prior view. At automation, we produced a solid quarter of 24% organic sales growth, as global trends towards industrial robotics and complex end-of-arm tooling solutions remain favorable. As noted earlier, with seasonal effects, year-over-year organic orders were flat. However, we continue to expect 2021 to deliver organic growth of approximately 20% on par with our July expectation. To close my industrial discussion, the business delivered really good third quarter performance. As we look forward, the near-term challenges of the current operating environment appear likely to persist. That said, the team is working diligently to lessen the various headwinds facing the business. For this segment, we forecast 2021 organic growth in the mid-teens, consistent with our prior view. We now anticipate operating margins of 11.5% to 12%, a bit softer than our prior expectation, with the decline primarily driven by the current economic environment. Moving to aerospace, sales improved 30% over last year and 8% sequentially from the second quarter. Our original equipment manufacturing and aftermarket businesses each generated excellent results. Adjusted operating margin improved 490 basis points from a year ago and 130 basis points sequentially. The aerospace environment continues to show recovery progress. Global passenger traffic and flight activity are expected to increase further as international markets reopen. Aerospace freight markets continued to be strong. All of that contributes to a strengthening aftermarket. Correspondingly, our sequential sales growth has been good, and we expect that trend to continue. Solid order activity continued in the third quarter, with total orders up approximately 70% versus a year ago. OEM orders were up approximately 80%, with the aftermarket being up approximately 50%. Within the aftermarket, MRO was up 40 plus percent and spare parts up 70%. Our 2021 outlook for aerospace is for total sales to be up low single digits. Within the segment, OEM sales are forecast to be up mid single digits, MRO down low single digits and spare parts down in the low to mid teens. the latter a bit better than our July view. Segment operating margin is anticipated to be approximately 14%, slightly higher than our prior outlook, benefiting from the better spare parts mix. In closing, a solid third quarter of financial performance in the face of some accumulating pressures. As we look ahead, we're taking the necessary steps to limit the risks noted. with our primary focus on pricing initiatives and other actions directed to cost management. Overall, we are positive in the ongoing demand we are seeing from our customers and the underlying strength of our end markets. Moving forward, our growth investments in strategic marketing and our sales force, digitalization and innovation should enhance our ability to power up the recovery curve and allow us to deliver further stakeholder value. Now let me pass the call over to Julie for details of our quarterly performance.